Conducting third-party discovery against a current client? Tread carefully

What if you’re about to initiate litigation on behalf of your client, or you are in the middle of litigation, and you find that a different client you represent in another matter has documents relevant to the case? Can you subpoena the documents from your own client? Can you cross-examine that client at trial? Here is some background and some practical advice.

Current client conflicts

The ABA’s Ethics Committee analyzed this recurring scenario 25 years ago in its Formal Opinion 92-367, under the verbose-but-descriptive title “Lawyer Examining a Client as an Adverse Witness, or Conducting Third Party Discovery of the Client.”

The focus is on Model Rule 1.7, which deals with current-client conflicts. It addresses representations directly adverse to existing clients and also situations where your representation of a client may be “materially limited” by your duties to another client.

The Committee concluded that cross-examining or directing third-party discovery to an existing client likely would be directly adverse to that client, and would create a disqualifying conflict of interest — unless both clients consented. The circumstances would likely “pit the duty of loyalty to each client against the duty of loyalty to the other,” said the Committee.

The possibility of a “material limitation” on your representation of the litigation client is equally clear. First, you could breach the duty of confidentiality you owe to your client who is the witness or the target of a document subpoena. After all, in these circumstances, by definition, you have information that is relevant to the litigation you are conducting on behalf of the other client.

Second, there is a “punch-pulling” problem: your interest in keeping the witness-client, or in not inconveniencing that client, may consciously or unconsciously cause you to go easier on that client, conducting a “‘soft’ or deferential” examination or document request, to the possible disadvantage of your litigation client.

The conflict issue is sharpened, of course, by Model Rule 1.10, the imputation rule: if you are disqualified, so are all the other lawyers in your firm, by imputation.

Best practices?

The good news is that this conflict is generally viewed as being subject to the affected clients’ consent and waiver. But how should you proceed? Regarding the situation presented by third-party discovery against a current client, the experience of my firm and others suggests the following possible steps:

Advise the litigation client on whose behalf you want to serve the document subpoena that the target of the subpoena is another firm client in unrelated matters.

Get permission from the litigation client to inform the target of the subpoena about the subpoena and the subject matter of the request.

Determine if the subpoena target will be objecting to the subpoena or attempting to block production of any information called for by the subpoena.

If the answers to that question is “no,” then there is likely little risk of an actual conflict; but otherwise, there is a conflict that requires a waiver.

In the absence of a waiver from each client, or if your litigation client objects at the outset to the exploratory discussion with the subpoena target, you can’t proceed.

In that case, the ABA Ethics Committee suggests that, as an alternative to withdrawing (which presents obvious and even acute problems, depending on the stage of the litigation), you might be able to co-counsel with an un-conflicted lawyer who would shoulder the third-party discovery. A New York City Bar Association ethics opinion endorses that course of action. But a California opinion questioned whether such co-counsel would be truly independent so as to alleviate the conflict.

The ABA’s ETHICSearch has a useful recent article on the ins and outs of this quandary.

Clearly, there is a lot to think about when you are faced with this problem, and as always, you should make sure you know how your own jurisdiction approaches it.

Karen is a member of Thompson Hine’s business litigation group. She is a member and former chair of the Certified Grievance Committee of the Cleveland Metropolitan Bar Association, and a member and past chair of the Ohio State Bar Association’s Ethics Committee. She also chairs that committee’s Ethics Opinions subcommittee, and has authored several ethics opinions on behalf of the OSBA interpreting the Ohio Rules of Professional Conduct. Karen also is an adjunct professor at Cleveland-Marshall College of Law, teaching legal ethics.

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